PLANS to sell VHI are gathering pace with the Department of Health seeking outside legal and financial advice to prepare disposal plans for the state-owned insurer.

Minister Mary Harney announced plans to sell VHI in May and tenders have now been invited for a single team to provide legal and financial advice to the department, which expects to make an appointment early next year after a 52-day tender period expires.

The contract is to provide: "financial, legal and other relevant advice on the best sequence, structures and steps to sell the business".

Tender notice

It will run for a maximum of 36 months, according to the tender notice. A spokesperson for the Department of Health said there was no set budget for the external role.

The department anticipates strong interest in the role and a spokesperson said it expects the resulting competition to keep the cost down.

The department would not offer any guidance on how much it expects to realise by selling off VHI.

VHI had revenues of €1.34bn in 2009 but paid out €1.341bn in claims. As a state-owned entity it has never needed to set aside a cash cushion to ensure it can meet future claims.

As a result its balance sheet will need to be beefed up with a significant cash injection to comply with the Financial Regulator's capital requirements for private sector insurers.